The Reserve Bank of India has finally given in and cut interest rates a little — sufficient to keep sentiment positive, but not quite enough to spark a surge in inflation.

What is key, though, is the RBI’s change in tone, which appears to suggest that it is finally turning its focus on economic growth, rather than on controlling prices.

The central bank said as much after the policy review Tuesday: “It is critical now to arrest the loss of growth momentum without endangering external stability.”

Tuesday’s rate cut — the first since April, 2012 — will bring the repurchase rate, or the rate at which the RBI lends money to banks, to 7.75% from 8%.

The central bank also lowered banks’ cash reserve requirement — or the ratio of deposits they must park with the RBI — to 4% from 4.25% to ease a liquidity crunch.

India’s economy grew by between 5.2% and 5.5% in the first three quarters of 2012, a far cry from the nearly 9% expansion seen in early 2011.

The government’s fiscal deficit in the current fiscal year through March is expected to be 5.3% of gross domestic product, down from 5.75% in the previous year.

Here’s a round-up of what economists, industry leaders and a top government adviser had to say on the RBI’s rate decision.

“Despite RBI officials’ less-than-dovish comments in recent weeks, there was a good case for at least modest monetary easing at today’s meeting. After all, WPI [wholesale price index] has retreated for three consecutive months,” said Jyoti Narasimhan, an economist at IHS Global.

The big worry is that economic growth is still in the doldrums despite tentative signs of bottoming out, she added.

Rupa Rege Nitsure, chief economist at Bank of Baroda, said Tuesday’s rate decision could spur banks to cut lending rates — which would provide companies cheaper funds to expand their operations and “improve the feel-good factor.”

Industry lobby groups welcomed the RBI’s decision, hoping it would be the first of several more to come.

Naina Lal Kidwai, president of the Federation of Indian Chambers of Commerce and Industry lobby group, said the rate cut will help reverse a slowdown in industrial activity.

Members of the group are seeking a further 0.75 to 1 percentage point cut in the repurchase rate in the next fiscal year if the economy is to return to high growth, she added.

C. Rangarajan, the chairman of Prime Minister Manmohan Singh‘s Economic Advisory Council, said while speaking on television that the rate decision would help stimulate growth. He added that a further drop in inflation could lead to more rate cuts.

He expects inflation to ease by about 1 percentage point in the next fiscal year starting April 1.

Robert Prior-Wandesforde, director of Asian Economics at Credit Suisse, said the RBI’s 0.25 percentage point cut in the lending rate as well as in the cash reserve ratio were really the most one could have expected now, given the central bank’s fairly hawkish macroeconomic review given Monday.

“The extent of any future [interest rate] action will depend mainly on the development of wholesale price inflation,” Mr. Prior-Wandesforde said.

The RBI said Monday that it has limited room for easing monetary policy to support growth as it is worried about the wide fiscal and current account gaps, on top of a likelihood that inflation may not ease significantly next fiscal year.

The WPI, India’s main inflation gauge, was 7.2% in December, well above the central bank’s comfort level of about 5%.

Recent steps by the government to allow periodic increases in state-set prices of diesel, the country’s main transportation fuel, are likely to push up inflation in the next few months.

Mr. Prior-Wandesforde said a 20% increase in diesel prices over the next 18 months would push the inflation rate higher by about 70 basis points.

Seshagiri Rao, chief financial officer of JSW Steel, said the rate cut was much needed, because economic growth is moderating and industrial production is decelerating.

Government data released Jan. 11 showed that India’s industrial production contracted 0.1% from a year earlier in November, the sixth time it has shrunk in nine months.

Mr. Rao said he hopes the government will push forward with economic reforms. This will improve business sentiment, spur investments and create more monetary space for further interest rate cuts.

Since September, the government has taken several measures to help the economy, such as allowing foreign supermarket chains to set up shop in India, letting foreign airlines invest in Indian carriers, allowing increases in diesel prices and charting out a roadmap to limit its budget deficit.

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